Miller & Associates v BMW Australian Finance 2010 HCA 29 September 2010
This case involved an insurance broker seeking premium funding for its client. Funding was granted but the insured failed to repay the amount loaned. The shortfall was substantial. The funder sued the broker for misleading and deceptive conduct.
The funder alleged that while the relevant policy was given to it and it was certainly capable of reading and understanding it (but not read) the broker engaged in misleading conduct for failing to speak up about its contents. It was alleged that had the funder known of a particular term in the policy it would not have funded the premium. The term which the funder says ought to have been disclosed was an unusual term for the class of insurances concerned.
The funder failed at trial but won the intermediate appeal. In the High Court the five judges unanimously restored the trial judge’s result. In so doing, the High Court decided that the broker’s alleged silence in not drawing to the attention of the funder the express contents of the policy was not misleading conduct.
The High Court’s reasons comprised two sets of written judgments. One set of reasons was by two judges. The other set of reasons was by three judges.
All the judges agreed the reasons of the judgment written by the three judges.
Those reasons did not disclose any analysis of the historical jurisprudence. In that respect, the reasons were startlingly blunt.
In the opinion of those three judges, the facts did not disclose any reasonable expectation in the funder that the broker would relieve the funder from reading the document for itself. Accordingly, the broker’s silence could not constitute misleading conduct.
The other two judges did review the historical jurisprudence on the place of silence when considering misleading conduct.
They quoted with approval the reasons of High Court Judge Gummow in a decision when he was on the Federal Court. He said that silence could not be misleading unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed. It is difficult to see how mere silence could support the inference that the fact does not exist.
Comments
It was very significant for all of the judges that the broker and the funder were involved in a commercial transaction where the bargaining power between each was similar or the same.
The funder’s failure/refusal to read the documents presented to it, carefully, was very significant for all of the judges given that they tied the result of misleading conduct to a party’s reasonable expectations.
It is clear that the judges thought that the funder by not reading the policy, forfeited any reasonable expectation if such an expectation existed at all.
The judges were certainly not prepared to treat the funder in a similar position to an insurer where the well settled law indicates that an insured has a high obligation about disclosure.
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